Monday, October 3, 2011

Welcome back! Money creation to continue…

Bank of England to inject an extra £50bn to prop up economy

''The Bank of England is gearing up for another round of quantitative easing – or printing money – as an insurance against a stagnant UK economy slipping back into recession. City economists are confident that the Bank will pump another £50billion into the economy by next month, possibly even this week. This would expand the size of the QE programme to £250billion since March 2009.''

Posted by hpwatcher @ 06:27 AM (2584 views)
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11 thoughts on “Welcome back! Money creation to continue…

  • Looks like the mail readers have understood what this means:-

    Enough with the fancy terms, “Quantative Easing” My Ar*e…..DEVALUATION OF CURRENCY is what this delightfull practice used to be called….Every pound in circulation is a fractional share of net value which used to be a gold standard based on the quantity of gold held in reserve to guarantee those pounds….Increase the pounds & you make every pound fraction worth a little bit less….ie: DEVALUATION OF CURRENCY

    Well it worked for America didn’t it?! Oh wait that’s right the $14 trillion & some change they now owe…. But wait QE is certain to give Sterling a boost… Oh wait no sterling will plummet even further…. But it will help bring down the cost of items in the shops… No wait a weak pound will mean petrol, food & everything else will have to go up to compensate for the weak pound, making British people even poorer & leaving them with even less to spend at the shops, which will then go bankrupt & close down leaving more people on benefits. How does this help economy exactly?!!! Sure might be cheaper to export things with a weak pound… But whats the UK’s import to export ratio? I’m gonna guess the UK imports much more than it exports… This will be an absolute disaster for the UK… But I’m sure the bankers will find a way of cashing in nicely! This has to be some sort of sick joke! QE will be a disaster!!!!

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  • Are they pretending that it will help Joe Bloggs on the street? I guess they can say that the banks will lend more money to kick-start the economy, just what we need.

    Perhaps this is a good thing. Inflation will get so high it will cause a mass of repossessions, just the same as putting up interest rates would.

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  • This is a panic measure. The sooner it is exhausted as a concept the sooner they will see that ludicrously low interest rates can no longer be sustained either. I’m glad. It has been a false hope / distraction for too long. Of course they’re never going to admit it was a failure. They’ll spin it like that last report.

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  • Speculation is mounting the Bank of England may be close to cutting base rates to 0.25% and pumping at least £50bn more into the economy through quantitative easing.

    Full story http://www.ifaonline.co.uk/ifaonline/news/2113711/boe-mulls-rate-cut-025-odds-shorten-quant-easing

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  • cornishtinmine says:

    … although is it really increasing the money supply? If the FIAT system is not working – banks are not increasing the money supply – so the BoE injection is effectively keeping the status quo?

    If the BoE cut rates to 0.25% 3 people I know will only be paying 0.6% on their lifetime tracker mortgages – and with inflation at 5% (and likely to increase further as a result) will mean they are effectively getting a greater return on their massive mortgage than I am on my savings! Hopefully house prices will fall further to make things a bit fairer…

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  • cornishtinmine says:

    …. although chances are house prices will edge upwards as even less people will be forced to sell and even more foreign investors will be encouraged into the marketplace – the rich will get richer and the poor poorer and the north-south divide will increase even further…

    …and what’s this I heard last night that the Govt. are coming up with another plan to reduce the deposits required for first time buyers? … it’s a joke!

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  • sibley's b'stard child says:

    Blimey Jack, I didn’t seriously think they’d consider cutting BR further.

    It’s like the unstoppable force/immovable object; I wonder what will give way first.

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  • … although is it really increasing the money supply? If the FIAT system is not working – banks are not increasing the money supply – so the BoE injection is effectively keeping the status quo?

    Yes it is, because it keeps effectively keeps interest rates low. Making money cheaper, and in a fractional banking system, additional money is made.

    That’s my view, but you will find lots of people with different views of the effects of QE.

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  • This will continue until the pound is worth less than half what it was in 2007, then houses will be reasonably priced in real terms and so the housing market can get going again. Only problem is every other western country is trying the same game.

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  • Sib’s – this “rumour” (if thats the correct phrase) has been circulating for several months in the fund management world – I’m now begining to wonder if there is a bit more truth in it than I originally thought.

    Thursday’s Base rate announcement might require a different title to those that we’ve had for the last 23 months. Time to roll out Frazer from Dad’s Army and that famous catch phrase of his.

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